by William Skink
I will once again extend my gratitude to Jesse Ramos for using his city council position to bring attention to the skim & give function MRA plays in developing/gentrifying Missoula. This Missoulian feature–which I encourage every Missoulian to read– offers a much needed counter-narrative that no progressive/liberal political official in Missoula has thus far dared to articulate.
Before getting to the article I want to point out that the use of technical language, like tax increment financing, functions as average-joe-repellant, and it works wonders. When someone sees a term like this they assume the concept it represents will be as technical and difficult to understand as the term itself.
But that’s not necessarily true. I just used the term skim & give to frame the basic concept of what TIF money is, and Ramos uses similar, easy to understand language. This is an important step in getting more Missoulians aware of the dynamic exacerbating the cost of housing in Missoula.
The structure of the article is curious. Just as the basic concept of TIF money is introduced, the article uses that as an opportunity to weirdly pivot to the Trump tax cuts in order to get Ramos’ take. Not only does this allow the title of the article to reference Trump and not TIF, the ensuing analysis of the tax cuts also takes up a lot of ink before getting back to what interests me. Here’s the pivot paragraph:
Much of his criticism of TIF has been to describe it as “gifts” to wealthy corporations and individuals. That criticism sounds exactly like that leveled by Democrats against the Trump tax cuts, so the Missoulian asked Ramos to clarify his stance on national economic policy.
After looking at the tax cuts and marveling that a conservative could have consistently conservative concerns about cuts to federal taxes with no cuts in spending, the focus gets back to TIF, URDs and MRA:
Tax Increment Financing is a program used in Missoula to keep new property taxes within Urban Renewal Districts. Developers can apply for TIF money, which is paid back by the new property taxes their development generates, for projects that ostensibly benefit the public such as new sidewalks, new facades and new infrastructure. Both TIF and the Trump tax cuts are touted to spur job creation and investment, and both decrease the revenues going to the government’s general fund.
Yep, that’s a pretty clear description. New property tax revenue is skimmed from the URD and given to developers for projects that “ostensibly” benefit the public. Let’s look at the definition of ostensibly:
apparently or purportedly, but perhaps not actually.
Perhaps not actually? Let’s get back to the article:
Ramos has criticized the TIF program as “giving money” to wealthy developers like Bill Coffee, the owner of Stockman Bank, and hotel developer Andy Holloran, who built the new Marriott hotel on the site of the Merc. The Trump tax cuts also benefited those same developers by decreasing their taxes, but in exchange they weren’t required to build new buildings in Missoula that will eventually pay property taxes into the city’s general fund or build new sidewalks.
For example, Andy Holloran received $3.59 million in TIF aid for the new Marriott hotel but had to use the money to build new sidewalks, preserve the historic Pharmacy and salvage materials. The new property taxes the hotel generates, estimated to be $186,000 a year, will not go to city schools or police through the general fund but will instead be used to service the debt on the $3.59 million and will also be used for other projects in the Front Street Urban Renewal District. When the district sunsets in 2044, the property taxes will go back to the general fund.
Advocates like MRA director Ellen Buchanan and City Council President Bryan von Lossberg say TIF aid incentivizes development that wouldn’t happen otherwise and provides leverage for developers to complete big, difficult projects in blighted areas and spur the economy.
The argument that all this development primed by TIF money parceled out by MRA would not have happened without that public investment is a convenient argument to make because it’s not provable.
Throughout the article Trump tax cuts are compared to TIF handouts. Along those lines Ramos makes some distinctions about the two:
Ramos considers TIF a tax break, where the government is choosing favorites, whereas the federal tax package was a “tax cut.”
“I called TIF worse than a tax break” at a recent City Council meeting, Ramos explained. “The difference is, it seems subtle but the difference is a break goes to a select group of individuals where a tax cut is a reduction overall.”
Ramos also criticized the fact that hotel developer Andy Holloran got TIF to build new public sidewalks downtown while Missoula taxpayers were forced to cough up for new sidewalks in 2012.
“The hypocrisy of that is ridiculous,” he said.
He also said that when the MRA approved $6.9 million in TIF aid for a new road, sidewalks, street trees and other infrastructure near Southgate Mall, it mainly benefited the wealthy Lambros family, who later sold the mall for $58 million.
“They needed that road specifically to benefit the business to get the Lucky’s Market in there,” Ramos said. “It was directly to benefit them. I wouldn’t have had a problem if the road was created because of demand, if there was a bunch of petitions that people really wanted a thoroughfare there.
“But that’s not what triggered it. What triggered it is a private developer who asked for this money. He’d already invested millions of his own money into it and then he sold the mall later because it was more valuable after that and that was my issue with that.”
Right on, Ramos!
Getting back to that unprovable argument, here are some Engen mouthpieces justifying this MRA skim & give scheme:
City officials have argued that developers would choose not to take on projects in blighted areas if it weren’t for TIF aid. Much of the development in Missoula over the last few years has been inside the six Urban Renewal Districts.
Ellen Buchanan, the director of the MRA, told the City Council earlier this year that the first Urban Renewal District in town encompassed much of downtown and TIF aid is responsible for Missoula’s revitalized and booming downtown.
“I would argue all day long that most of those projects won’t happen in those districts without the investment of the public funds,” she said.
Ramos argues that all of the development, from the new ROAM Student Housing to the Merc hotel to the new Stockman Bank building, would have happened anyway without TIF help, and if it weren’t for TIF the property taxes would be going to the general fund and school districts. Instead, he says, taxpayers must shoulder the burden while the TIF money goes to special projects.
This critical counter-narrative about how Missoula has structured its growth is not being put forward by many people. Kudos to Ramos for having the guts to call out MRA’s skim & give scheme for what it is.